iiNet hunts for more ISP fodder

Australia's third-largest internet service provider (ISP) iiNet is still on the hunt for other takeover targets, despite picking up Adam Internet for AU$60 million today. However, the company may struggle to get any future acquisitions past the competition watchdog.

Since its founding in 1993, iiNet has not been shy to grow its customer base through aggressive takeovers of rival internet service providers. The company has acquired at least 15 companies in its 20 years of operation, including former big-name players such as Internode, TransACT, OzEmail, Westnet, Netspace, AAPT, and now Adam Internet.

As a result, the telecommunications industry has shrunk significantly over that time. It hasn't all been iiNet's doing, however, with M2 making a number of large acquisitions of late, including Primus, and most recently Eftel and Dodo.

The result means that iiNet now has over 900,000 broadband subscribers, behind Telstra's 2.7 million broadband customers and Optus' 1 million broadband customers, but above TPG, which is at 631,000, and M2's consumer base, which is sitting at well over 400,000 after the acquisition of Dodo.

Despite all of the consolidation, iiNet's chief financial officer David Buckingham said today that iiNet would still look for other potential takeovers in the market.

"Although the Australian telco market continues to consolidate, opportunities still exist, and iiNet will continue to stay on the lookout for good deals," he said in a statement provided to ZDNet.

But the company will struggle to find any ISPs of significant size that would also be able to get the approval of the Australian Competition and Consumer Commission (ACCC), according to Telsyte analyst Alvin Lee.

"Given Dodo and Eftel was acquired by M2 Telecom earlier this year, there simply aren't many small to medium players left in the retail space after the acquisition of Adam Internet today," he told ZDNet.

The purchase of Adam Internet today will, however, make it tougher for TPG to launch its own takeover bid for iiNet. TPG currently has a 7.24 percent stake in iiNet, which some have speculated would lead to a potential takeover of the company, but iiNet CEO Michael Malone has said is just a "seat at the table".